Focus on real issues and don’t get distracted, advises Raging River, Taseko dissident

It won’t take as long as the U.S. presidential election, but the battle for the hearts and minds of shareholders of Taseko Mines, underway for 2 months, has 8 weeks to operate before the final showdown on May 10.

And halfway through, Chicago-based shareholder Raging River Capital – that is leading the charge to have its four director nominees elected, a part of a plan to alter Taseko’s direction – argues its campaign is having an effect.

In a job interview Friday, Mark Radzik, managing partner of Raging River, said “you know that you have hit the best spot when you are getting a violent reaction. And we’re simply because,” added Radzik when referring to the volley of releases, some corporate governance changes and amendments with a corporate policies produced by Taseko, a company that is representative of Raging River’s entry into Canadian proxy battles.

Radzik argues the Taseko fact is a part of its plan “to distract in the real issues” that they argues are poor share price performance (in the last 5 years the shares have declined by almost 90 percent); and company governance.

“Underperformance is often the symptom, not the reason,” said Radzik. “I would posit that the cause is insider deals and conflicted directors.”

Earlier he said “making preferential, related party deals inside a difficult macro cycle further destroys shareholder value.” By his calculations, in the last three years Taseko has spent $28 million in “investments to related companies and fees.”

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Radzik was talking about the role took part in Taseko played by Hunter Dickinson (a private company which has “acquired, advanced and developed mineral properties,” for 30 years and which employs some Taseko executives) and the company’s late 2014 purchase of Curis Resources. Radzik claimed Friday the purchase of that “near bankrupt company, having a technology that’s not tested,” was “ridiculous.”

In fact, if Radzik wins the proxy battle it’s not inconceivable he may provide the Curis mine back to the executives who organized the purchase – as long as they spend the money for $100 million valuation. “It’s a difficult situation, the more they argue it isn’t worth $100 million, the more they indict themselves.”

His firm, which has a 5.1 per cent equity stake along with a 7.95 per cent curiosity about a Taseko bond issue – both bought late last year – added shareholders, together with a quantity of long-suffering retail investors, also have reached out.

One institutional manager Vertex One Asset Management with a 3.1 per stake, said hello “would be supportive of Raging River’s plan to focus Taseko’s business strategy, assess the relationship with Hunter Dickinson and address Taseko’s balance sheet.”

So assuming that Raging River, which said “it’s a shareholder first,” and that has written to Taseko advising against shareholder dilution and has provided to backstop a rights offering, wins what would Taseko look like within a few years? Radzik said it’s a few “getting the best strategy (by) focusing on the core operating assets, and re-engaging using the First Nations so that we build trust.”

Taseko said Friday that as a major bondholder, Raging River includes a conflict. “Raging River’s nominees could be incentivized to accelerate repayment of Taseko’s debt by liquidating Taseko’s assets, even at the end of the market.”

Taseko added it “benefits from Hunter Dickinson’s quality and cost-effective services. Taseko’s disclosure is transparent and the relationship follows proper governance. There isn’t any conflict.”

Financial Post

bcritchley@nationalpost.com